Settle v. Winters
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Opinion of the Court
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HAYS, C. J.
This case has been prepared with great care, and presented with marked ability on each side. It is conceded that the contract upon which this action is based was drawn by one of the defendants, who is a lawyer; that there was no other attorney present, or to be procured, at the time and place where it was drawn. Our first duty is to ascertain what the parties themselves meant and understood by the terms of this instrument; for if the intention is plain and clear, we ought, if possible, to give force and effect to their intent.
Heading this contract, then, in the light of surrounding circumstances, as they existed at the time of drawing and executing the same, we think it must be construed to be a lease with an option to purchase. Did not the defendant who drew the contract so understand it? If not, did he not intend that the plaintiffs, who are unlearned in the law should ? If he did not intend that the plaintiffs should so understand it, why did he begin the instrument, “This indenture of lease with privilege of purchase”? Again, the words are used, “grant, demise and lease.” Then, the usual reservations of a lease are found — that the parties of the first part shall have the right to inspect the mines at all times. “The parties of the second part agree to enter upon said properties and extract ore so long as they shall deem it profitable.” They are to do the work in a proper and workman-like manner, to keep the property clear of all liens for working the same, and to pay one-half of the gross proceeds of the mine, as fast as taken out, to the parties of the first part; and “upon the expiration of the term Hereby granted/ to surrender up the said premises, with all the improvements, unless on or before the twenty-seventh day of November, 1883, the said snm of $40,000 should have been paid”-; and, “upon failure to comply with any covenant, promise, or thing therein contained by the parties of the second part, to re-enter, take possession,” etc.
True, the contract provides that the parties of the first part shall credit the said purchase price of $40,000. with the sum so received, and there are terms used that might be construed *225 into a contract of sale. But in construing a contract it is contrary to well-settled rules to give it a narrow and technical interpretation, based upon some particular word or clause. The intent must be gathered from an examination of the instrument as a whole, and all clauses made consistent, if possible.
At the time of making the contract, and as a part of the transaction, the appellants executed and delivered to respondents the agreement in writing drawn by defendant G-anahl, in which they mention the contract as a “lease with the privilege of purchase,” and they also describe themselves as “lessees.” TJnder the circumstances, how must the respondents have considered the contract, and what did the appellants intend to have them understand? We think the natural interpretation of the words used indicates the intention of the respondents to lease the premises in dispute to appellants, and to give to them the right or option to purchase, at any time during the life of said lease, upon the payment in full of the amount agreed upon. It seems to us that it must have been so understood by all the parties. While time is not necessarily of the essence of the contract in equity, yet it may be made so by the parties themselves, or by the circumstances of the ease. (3 Parsons on Contracts, 383; 1 Pomeroy’s Equity Jurisprudence, sec. 455; Green v. Covillaud, 10 Cal. 317 , 70 Am. Dec. 725 ; Utley v. Lumber Co., 59 Mich. 263 , 26 N. W. 488 .)
Waterman, in his work on the Specific Performance of Contracts, says: “Courts of equity formerly paid but little attention to the mere time of which the stipulations of a contract were to be performed, and carried the doctrine of relief, notwithstanding a want of punctuality, to an extravagant length.” “Bub the tendency of the modern decisions is to bring the doctrine within such moderate bounds as seem clearly indicated by the principles of equity, and by a reasonable regard to the common accidents, mistakes, infirmities and inequalities belonging to all human transaction.” (Waterman on Specific Performance of Contracts, see. 456.)
Equity usually treats time as originally of the essence of the contract when the agreement shows that the parties intended that it should be so regarded. (Waterman on Specific Performance of Contracts, sees. 459, 460; Pomeroy’s Specific Per *226 formance of Contracts, secs. 399, 401; Grey v. Tubbs, 43 Cal. 362 ; Benedict v. Lynch, 1 Johns. Ch. 370 , 7 Am. Dec. 484 ; Wells v. Smith, 7 Paige, 22 , 31 Am. Dee. 274, and note; Willard’s Equity Jurisprudence, 294; Phelps v. Railroad Co., 63 Ill. 468 .)
This rule seems to be well settled, and perhaps the more difficult question for solution now before us is whether time, in this case, has been made essential. The contract provides that it shall run until the twenty-seventh day of November, 1883. It further provides for a conveyance, provided the sum of $40,000 shall have been paid on or before the twenty-seventh day of November, 1883. It further provides that upon the expiration of the term hereby granted, to surrender up the possession of said premises, with all the improvements, to the said parties of the first part, unless, on or before the said twenty-seventh day of November, 1883, the said sum of $40,000 has been paid. Again, by the terms of the extension of November 24th, which are: “In consideration of the extension of the time of the above instrument for thirty days, or until and including December .27, 1883" — it would seem that the 'parties understood and intended to make time essential; for the respondents extend the time until and including December 27, 1883. Each party is specific in fixing the limit of time. Then, again, we may be aided in reaching a correct conclusion by an examination of the .character of the property. Eeal estate is less stable in this country than in England, hence our courts have been more liberal in extending the rule and allowing the special facts and circumstances of each case to have a more controlling influence. Time is usually regarded as of the essence of the contract, both in England and America, where the character of the property renders it liable to fluctuations in value. (Pomeroy’s Specific Performance of Contracts, sec. 385; Waterman on Specific Performance of Contracts, sec. 460; Fry on Specific Performance of Contracts, secs. 713, 718; Green v. Covillaud, 10 Cal. 330 , 70 Am. Dec. 725 ; Jennisons v. Leonard, 21 Wall. 302 ; Goldsmith v. Guild, 92 Mass. 239 ; Christie’s Appeal, 85 Pa. St. 463.)
Fry on Specific Performance of Contracts, section 716, says: “The nature of all mining transactions is such as to render .time essential; for no science, foresight or examination can *227 afford a sure guaranty against sudden loss, disappointment! and reverses; and a person claiming an interest in such an undertaking ought, therefore, to show himself in good time willing to partake of the possible loss as well as profit.” The same, in substance, has been stated by many other authors. (Waterman on Specific Performance of Contracts, sec. 460; Pomeroy’s Specific Performance of Contracts, sec. 385, and note; Willard’s Equity Jurisprudence, sec. 292.) We think this a wise rule, and that it should be adhered to, especially in a mining country like ours.
It is claimed by the appellants that respondent Eeeser extended the time after the twenty-seventh of December, 1883. The trial court found that no such extension had been made, and the evidence abundantly sustains this finding.
It is also claimed by the appellants that no demand was made upon them by respondents for the possession of the mine. The trial court found the demand was made, and we think the evidence preponderates in favor of the finding.
The appellants offered payment in full, in June, 1884; but this being made long after the commencement of the action, and more than five months after the time limited by the parties for such payment, we think, cannot be available for the reasons heretofore stated.
It has been urged with great force that in this case appellants have paid to plaintiffs more than one-half of the agreed price; but it must be remembered that this was all from the moiety of ore, or from the proceeds thereof, stipulated to be paid, and must be treated as royalty or rent for the use of the mine. We think, in the case at bar, a different rule should govern than what would be applied in an ordinary sale of real estate. For then, usually, the value of the realty remains the same; and if the grantor is permitted to retain both payment and realty,great injustice might be done. But in the ease at bar each ton of ore taken out depletes the mine so much, and in this case it has been exhausted to the amount of over $42,000. But it is claimed that the appellants have worked the mine at great loss. By the terms of the contract they were at liberty to abandon the work whenever they should deem it unprofitable. Surely *228 it will not be claimed that equity can be invoked to relieve a party from tbe result of a bad bargain alone.
Many other questions have been discussed, and many points urged by appellants, and, after a careful consideration of them all, we deem it unnecessary to discuss them at length, as we find no error. ■
Taking into consideration the contract as we construe it, the evident intent of the parties, the nature and character of the property in dispute, we think the conclusion is irresistible that time is of the essence of the contract, and that a court of equity, with all its great and varied power, cannot decree a specific performance in this case.
Judgment is therefore affirmed.
Broderick, J., concurring.
Dissent
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BUCK, J.,
Dissenting. — Conceding, for the present, that the contract in question is a lease with the option to purchase, when does the lease go into operation, and when is the option to purchase exercised ? It seems to be mutual. It is signed by both parties, and each covenants to do certain acts. As a lease it was partly executed when the defendants entered into possession of the mine. Until the option to purchase was exercised the defendants held as lessees. Whenever they exercised that option by the terms of the instrument they held as vendees. A sale is a contract whereby the ownership to property is transferred. The sale is completed when the possession and title pass from vendor to vendee. In the case at bar the possession was in defendants, but under the lease the title remained in the plaintiffs, the lessors. "When the option to purchase was exercised the title passed from the lessors to the lessees, and their relation changed from lessors and .lessees to vendors and ven-dees. The lessees having possession under an agreement to purchase, at a purchase price of $40,000, the title passed whenever they exercised their option by paying the purchase price, or any part of it. By the terms of the contract all money paid to the plaintiffs was to be credited on the purchase. Whenever, therefore, a credit was so made, a part of the purchase price was paid, and I apprehend the option to purchase was exercised. *229 We cannot call this payment royalty or rent, because, to do so, would contradict the express provisions of a sealed instrument. After the purchase this contract, which, up to that time, had operated as a lease, became, in its legal effect, a mortgage to secure the payment of the unpaid purchase price.
It is said that under the terms of this instrument the defendants could abandon the venture at any time. This provision enables us to appreciate the importance of that provision which makes the money paid purchase price. To induce defendants to continue the venture, and not abandon it, the plaintiffs stipulate that every dollar paid shall be a credit in payment of the mine. Can we say after, under this inducement, the defendants have expended a large amount of money, and paid plaintiffs more than half the amount of the purchase price, that the plaintiffs may alter or disregard the express covenant which has been the inducement to defendants-’ outlay, and say this $21,000 which you have paid us is only rent — you have not yet paid us any part of the purchase money — you have never exercised your option to purchase? It is claimed that time is of the essence of this contract. The general rule for the purchase of land is that time is not of the essence of the contract. It is claimed, however, that mining property constitutes an exception. Certain text-writers are quoted as sustaining this exception. An inspection of these references, however, gives us but two or three ancient English cases. No American cases are cited. If this exception is established by adjudication, it is remarkable that upon this coast, in the forty years of mining, no such has been adjudicated.
The terms used in the contract specifying the time at which the entire purchase price should be made, and when the plaintiffs might re-enter, cannot be said to determine that time is of its essence; for much stronger language has been adjudicated as meaning differently. Conceding, however, for the argument, that this exception exists in the case of mere options for the purchase of mining property, the question remains, Is this contract simply an option? It is admitted that it is unusual in its terms, conditions and covenants, and that it is difficult to construe. If we attempt to construe it on the theory that it is simply a lease, with an option to purchase, the terms used *230 will be unnecessary and confusing. If we consider, however, the circumstances of the parties and the property at the time the contract was executed; that, as seems established by undisputed testimony, the plaintiffs wished to sell and the defendants to buy; that nothing whatever was said of leasing the property, and that the word was first used in the contract itself; and interpret this instrument with the. light which these circumstances afford — we may understand the contract to be, what it is alleged to be, more than a mere option to purchase; that it was intended to secure the defendants in an anticipated large expenditure of money, and to enable them to secure the fruit of their labor by finally obtaining the title to the property; and also to secure the plaintiffs, through the covenants to re-enter, against the loss of any portion of the purchase price. If, indeed, it is conceded that it is generally understood by miners that time is of the essence in the mere option to purchase mines, that fact may account for the unusual covenants in the contract, and indicate that they were intended to guard. against that very construction, and protect the defendants against it.
In addition to these considerations, in considering the relief sought by plaintiffs in enjoining defendants from occupying the disputed premises, we should remember that the plaini tiffs covenant in the contract to give defendants a deed, free and clear of all encumbrances, of the premises in dispute. It is admitted that at the time when they claim the $40,000 should have been paid, and at the time this action was commenced, the property was, and as far as appears is yet, encumbered by a mortgage of at least $7,000. It is alleged that, after the alleged termination of the lease, demand was made of defendants for the premises. Was a mere demand sufficient? Should not that demand have been accompanied with an offer to fulfill on their part? This action to enjoin defendants and dispossess them of the premises is, in effect, an action for specific performance against defendants. The plaintiffs rely upon the strict letter of the law. They who seek equity must do equity, and I think the rule, applies that a party who seeks specific performance must first be prepared to do equity. This the plaintiffs have never done. It is said *231 that the amount of this encumbrance might have been deducted from the contract price; that the plaintiffs intended to pay this encumbrance out of the purchase price. The defendants were not required in the contract to provide for this encumbrance, nor to pay before it was discharged. Over $21,000 had already been paid, and yet the encumbrance of $7,000 was unprovided for.
Are the plaintiffs in position to invoke this hard relief against defendants when they have never offered to perform, and have never been in a condition to fulfill, on their part ? I think the suggestion that this encumbrance might have been provided against by retaining its amount by defendants is not tenable. This would involve a new contract; plaintiffs'claim under the written one set out in the complaint. It is suggested that defendants’ tender of the balance due, made six months after the time when the lease terminated, is too late. I think equity will regard the plaintiffs’ action as asking for specific performance of the contract, as they allege it to be, and defendants’ cross-complaint in response thereto as setting up and praying specific performance, as they understand the contract; that the defendants’ tender is made responsive to plaintiffs’ • demand, and is sufficient in time. I think this view is fully sustained by the authorities cited upon the argument, but I have not the time to classify them. For these reasons I cannot •assent to the opinion of the court.
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